Step 6: Get your papers in order
Make sure important documents are in order, including a will, health care proxy, living will, durable power of attorney, digital power of attorney and other estate-planning documents. Lack of preparation or simple mistakes can lead to years of trouble for survivors.
"Remarkably, many investors in their 50s and 60s do not have these documents or haven't bothered to keep them up to date," says Mike Maglio, principal and senior financial adviser at Brinton Eaton.
You need to take care in choosing who will exercise these powers on your behalf, says Luxenberg. It should be someone you trust to make important decisions and who is capable of exercising these powers, he says. It can be a relative or an elder care attorney.
A few words of caution in preparing these documents:
- Be sure to review the beneficiary designations on all your retirement accounts. "Even the most state-of-the-art estate plan can be rendered somewhat ineffective without proper beneficiary designations and asset titling," says Maglio.
- "Make sure you take the time to show your (spouse) or family how to access the information and have clear steps on what to do," says Riccio. "The easier you make it for them, the better."
- Finally, update these documents regularly, as tax laws are constantly changing.